Beautiful Virgin Islands

Monday, Oct 06, 2025

UK heading for recession, former chancellor Lord Hammond warns

UK heading for recession, former chancellor Lord Hammond warns

Lord Hammond told Sky News the UK economy will slow down quite sharply in the autumn, but said it is "probably a good thing".
The UK is heading for a recession, Lord Hammond has warned, saying "all the data points that way".

The former chancellor told Sky News the country faces a "very, very difficult period ahead in the short term".

He said he thinks the UK economy will slow down quite sharply in the autumn.

Lord Hammond said it was the "next part of the cycle that began with the COVID pandemic" when an "enormous government response" was delivered.

"To think that we can somehow move on from that, leave the tab on the table and act as if nothing had happened is unrealistic, is naive," he said.

"There's now got to be a part of the cycle where we correct for the extraordinary action that was taken during the pandemic.

"And a lot of what we're seeing at the moment in terms of inflation pressures in the domestic economy is a result of the people having saved quite a lot during the lockdown period and that saving getting released into the economy over the last six months."

He said that although the war in Ukraine is one of the drivers of inflation, the issue began long before the conflict, fuelled by COVID stimulus packages provided by the UK, US and other countries.

He said Brexit has also had an impact on soaring prices because it led to changes in supply chains.

"As we come out of the COVID crisis, supply and demand are out of kilter," he said.

He said there are many parts of the economy that are "still not back working back to normal yet" so there is "bound to be an effect there".

Asked if the government should increase spending or cut taxes, he said people are "looking for instant and pain-free solutions".

"During the period of the COVID crisis, they were invited to believe that the government could always deliver instant and pain-free solutions," he said.

"But you can't solve an inflation problem by injecting more liquidity into the economy - that is pouring fuel on the fire.

"And unfortunately, the issue in front of us at the moment is not about the short-term pain of inflation at 10%. We're having to live with that.

"The issue is whether we can now manage inflation down over the next year or so, to get back to something like normal."

He said the government "can't compensate people for all of the inflationary pressure" because short-term relief would lead to longer-term inflation.

Lord Hammond said an economic slowdown in the autumn is "probably a good thing".

He said he knows "people won't see it that way" but by "squeezing out the simulation before it becomes embedded, we stand a real chance of bouncing back next year in much better shape".

He expressed support for the Bank of England's decisions to raise the interest rate in the last few months.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
×